Pick n Pay’s R20 billion power play

Pick n Pay’s hugely successful discount retailer Boxer has published its pre-listing statement as it prepares to list on the Johannesburg Stock Exchange (JSE).

The group will list on 28 November 2024 and plans to have a secondary listing on the A2X.

As part of the initial public offering (IPO), the Pick n Pay Group hopes to raise between R8.0 billion and R8.5 billion through an offer of up to 202.4 million Boxer shares—around 40% of its total issued share capital—at a share price of between R42 and R54 per share.

This would give Boxer an estimated market capitalisation of between R21.1 billion and R24.7 billion.

Pick n Pay expects to retain a majority stake in Boxer of approximately 60% to 65% post-IPO.

Boxer’s IPO is the second and final step of the two-step recapitalisation plan by Pick n Pay, which has been struggling with losses and store closures in South Africa.

The first step of the plan was a rights offer in August, which was oversubscribed.

The rights offer, which sought to raise R4 billion, was 106% oversubscribed, with total subscriptions reaching over R8 billion.

98.7% of shareholders followed their rights, and the group received R4.3 billion in excess applications.

The Boxer listing is the next big step.

Boxer Superstores is the pre-eminent discount grocery retailer in South Africa with an annual turnover of R37.4 billion and trading profit of R2.1 billion (FY2024) and a store estate of 489 (at August 2024).

Boxer has a 47-year history and track record of consistent growth since Pick n Pay’s acquisition of the business in 2002 under the leadership of then-CEO Sean Summers, when it had just 35 stores and annual sales of R800 million.

Its ‘soft discounter’ proposition in the South African market has secured a share of approximately 68% of the discount grocery retail market and an estimated market share of 4.2% of the formal grocery market, more than double that of its closest competitor, estimated at 1.8%.

Boxer’s turnover grew at a CAGR of 18.6% between FY2022 and FY2024, with like-for-like growth of 7.7%.

The brand has, on average, added a new store every week for the last 3 financial years and has experienced a 14% CAGR in store numbers over the same period. By the end of this financial year (FY25), it expects to add 65 new stores.

The medium-to-long-term aim is to double its store footprint by opening 60 to 70 stores a year for the next six to seven years.

Pick n Pay CEO Sean Summers said the Boxer IPO will increase the retail store’s profile and visibility, providing it with access to a large pool of capital for growth.

“The initial capital raised from the listing will mean Pick n Pay will be debt-free, with a strong balance sheet and a significantly reduced interest bill, and in a position to accelerate its turnaround, driving long-term sustainable growth for all our shareholders,” he said.

The Boxer listing will go a long way in helping Pick n Pay reverse its financial struggles.

The group posted a R827.4 million loss for the interim period of 26 weeks ending 25 August 2024—extending losses by 45% compared to the same period last year. Boxer’s performance in the group results stands out as one of the big successes, in contrast to the traditional Pick n Pay brand.

Participation by qualified investors in the offer for Boxer shares will open on Monday, 11 November 2024, at 09h00 and close at 12h00 on Friday, 22 November 2024.

The publication date of the final offer price and final number of offer shares will be released on Monday, 25 November, and Boxer will officially list on 28 November 2024.

Read: Huge loss for Pick n Pay